Newcastle and Lake Macquarie Rental Market Snapshot (Including Interactive Maps)

In NSW we are endlessly presented mainstream media reports about the property market, heavily skewed by data from Sydney and Melbourne. The reality is that so much of what we are presented simply does not apply in our local area or regional areas generally. 

In this post we present the latest data specific to vacancy rates across Newcastle and Lake Macquarie, and discuss research showing that people are relocating to regional areas away from capital cities, which is in turn helping to drive house price growth and these lower vacancy rates in regional areas.

​People Are Moving Away From Capital Cities Towards Regional Areas

A recent article from Propertyology details the shift in migration of people away from capital cities, deeming the movement "Regionalisation". 

As summarised in the chart below, the population of Australia's eight capital cities decreased by almost 53,000 through internal migration over the three years ending June 2019. Importantly, this shows that the shift away from capitals towards regional areas commenced significantly earlier than the arrival of COVID-19 and its impacts. 

Propertyology propose five demographic reasons for the continued shift in housing demand towards regional areas:

1. Suburban shift - from living and working within inner-city areas to more affordable suburbs
2. Work from home - the increasing ability for employees to work from home without a requirement to be physically close to a city office 
3. Early retirees - job losses as a result of COVID-19 leading to early retirement and/or relocation to more affordable property
4. Job takers - people seeking new employment opportunities outside a capital city
5. Personal connection - returning to be closer to family, where they grew up, or where good holiday experiences have been enjoyed in the past

​Stronger House Price Growth In Regional Areas Compared With Capital Cities

The impact of the shift in demand is evidenced in typically stronger median house price growth in regional areas when compared to capital cities, as summarised in the chart below.

The strength of price growth in regional property is also cited in the September 2020 article from Realestate.com.au aptly titled "Regional areas dominating strongest price growth".

​Increased Rental Vacancy In Capital Cities, Decreased Vacancy In Regional Areas

​In addition to price growth in regional areas, we would expect to see decreased vacancy in regional areas and increased vacancy in capital cities. Both of these are realities now. 

Sydney Vacancy Rates Increased Significantly

Suburbtrends has provided an excellent interactive snapshot of the change in Sydney vacancy rates over the past 2 years ended August 2020. Sliding the chart from left to right will reveal the significant of the change in the past 2 years. In summary, the darker the blue shade, the higher the vacancy rate. 

According to SQM Research, the residential vacancy rate in Sydney postcode 2000 hit a high of 16.2% in May 2020, which has recovered slightly to a vacancy rate of 12.9% in August 2020. ​

Lake Macquarie and Newcastle Vacancy Rates Have Declined Significantly

In the Newcastle and Lake Macquarie ares however, we have seen a completely opposite trend to Sydney. Vacancy rates have decreased almost entirely across the board in the 12 months to September 2020. 

The following interactive graphic prepared for us by Suburbtrends highlights the vacancy rate change across key areas of Newcastle and Lake Macquarie between September 2019 (slide fully right) and September 2020 (slide fully left). 

Vacancy rate as a percentage is shown in the scale at top left, with darker blue areas indicating higher vacancy. 

As you can see, in the 12 months to September 2020, most suburbs across the entire region have seen a decrease in vacancy rate, with notable exceptions being in the Shortland / Jesmond / Waratah area - most impacted by declines in student accommodation due to COVID-19's impact on requirements for nearby university accommodation. ​

For a snapshot of the current vacancy rate where you or your investment property are located, hover over (or tap) the area of the map below to see the September 2020 vacancy rate as a popup. 

The disparity in rental trends between capital cities and regional areas is so pronounced that it is understood there is now a "Two-speed rental market".

CoreLogic’s head of research Eliza Owen has stated that data suggests "the closer a property was to the CBD, the more likely and steep rental declines have been through the pandemic".

Speak With Local Experts

In summary, if you are asked "How's the property market?", now more than ever it is important to clarify WHICH property market is being refered to as the differences are so significant and local markets often so misunderstood! 

The current state of play is a great reminder to seek local knowledge rather than mainstream media reporting to guide your investment decisions. ​